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Rockefeller called the
Consumer Choice in Online Video Act the “ultimate a la carte” legislation that
would give consumers the ability to “watch the programming they want to watch,
when they want to watch it, how they want to watch it, and pay for only what
they actually watch,” according to a Nov. 12 news release.

The
pro-consumer legislation will ruffle the feathers of many in the media industry
and potentially bring new regulatory benefits to online video providers like
Aereo Inc., Netflix Inc. and others in the content community, industry sources
said. Specifically, the bill aims to limit the ability of Internet service
providers (ISPs) to degrade consumers' access to online video services, provide
video distributors with reasonable access to broadcast and cable video content
and require ISPs to offer consumers greater billing transparency for their
services. The bill also directs the Federal Communications Commission to
monitor broadband billing practices to make sure they are not used
anti-competitively.

Boost to Aereo

Rockefeller's bill would add
some legal protections to Aereo's business model and limit the use of
provisions in video programming carriage contracts that could harm online video
competition, according to an executive summary of the bill. Aereo streams
broadcast TV programming transmitted by tiny Web-connected antennae located in
nine major U.S. cities and is planning to expand its service to at least 18
other markets. The bill does not address the copyright infringement
implications of such services.

Broadcasters have sought to stem the
growth of Aereo, which they say infringes their copyrights, by filing multiple
lawsuits that claim Aereo's online video streaming amounts to a public
performance. In April, Aereo won a 2nd U.S. Circuit Court of Appeals ruling
denying broadcasters a preliminary injunction against the service (63 TCM,
4/2/13). In October, broadcasters filed a Supreme Court petition for writ of
certiorari to review the Second Circuit Court's ruling (200 TCM, 10/16/13).

Aereo Founder Chet Kanojia said “we've longed believed that consumers
deserve more choice and control when it comes to how they watch television,” in
a statement sent via his spokesman. “Efforts to increase choice, competition
and transparency for the consumer are a welcome step in the right direction,”
Kanojia said. Netflix spokesman Joris Evers declined to comment.

Gordon
Smith, president of the National Association of Broadcasters, said he's
concerned the bill “may legitimize theft of copyrighted programming,” according
to a news release. “Copyright theft poses a very real threat to the revenue
stream that supports local television and the U.S. network-affiliate TV
relationship that is the envy of the world,” Smith said. Several broadcast
network executives had previously threatened to take their programming off the
air in order to thwart Aereo's business model.

Truth-in-Billing

Rockefeller's legislation seeks to ensure that “entrenched incumbent media
companies and broadband providers cannot use their market power
anti-competitively in order to limit the ability of online video distributors
to enter the market and respond to consumer demand,” said the executive summary
of the bill.

The bill would require ISPs to offer customers with clear
terms and conditions for their Internet service that disclose usage-based
billing. The bill tasks the FCC with certifying that ISPs are using accurate
data usage monitoring systems.

Rockefeller's bill would permit online
video providers to be regulated as “non-facilities based multichannel video
programming distributors” (MVPDs) and provide them with similar protections as
regular MVPDs. Online video providers would be permitted to access and
retransmit both cable and broadcast television content over their systems.

“Prudent policy dictates the removal of regulatory obstacles for all instead
of creating marketplace disparities that would 'cherry pick’ rights and
obligations for some,” the National Cable and Telecommunications Association
said in a news release. “We deeply respect Chairman Rockefeller and look
forward to working with him and all members of the Committee towards our mutual
goal of ensuring that the video marketplace continues to thrive.”

American Cable Association President Matthew Polka said the group shares
Rockefeller's concerns “about the ease with which certain existing players in
the market can use their market power to harm consumers and impede
competition,” according to a news release. “This is a significant concern for
small cable operators and reflects the need to consider a new approach.”

STELA Reauthorization Pending

It was unclear whether Rockefeller
will seek to incorporate the legislation into the Senate Commerce Committee's
bid to reauthorize the 2010 Satellite Television Extension and Localism Act
(STELA). STELA, which authorizes satellite providers to retransmit broadcast
television signals, is set to expire on Dec. 31, 2014.

Lawmakers are
interested in updating the laws governing the nation's video marketplace,
namely the Telecommunications Act of 1996, the Cable Television Consumer
Protection and Competition Act of 1992 and the Communications Act of 1934.
Reauthorization of STELA could provide Congress with the opportunity to update
these laws.

At a Senate Commerce Committee hearing in April, Rockefeller
said Congress needs to seek a “solution” to fill the gaps in the laws that
govern the telecommunications marketplace but said it won't happen this
congress. Rockefeller previously said he will not run for re-election in
2014.

To contact the reporter on this story: Bryce Baschuk in Washington
at bbaschuk@bna.com

To contact the editor responsible
for this story: Heather Rothman at hrothman@bna.com

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